The City Lima gets much of its water from natural catchments high in the Peruvian Andes – just as the city of Berne gets much of its from the Swiss Alps, New York gets much of its from the Catskills, Denver gets much of its from surrounding forests, and Dar es Salaam gets much of its from the Eastern Arc Mountains.

Each of these cities has come to terms with the fact that its economy depends on the watershed that feeds it, and Lima this week became the latest to implement a financing mechanism designed to support its economy by keeping its watershed healthy.

The Peruvian project -- dubbed the "Watershed Services Incubator" -- borrows heavily from projects that came before it. As the name implies, it's also designed to help those that follow.

And there should be plenty of those, especially in Latin America. The region has already become a hotbed of innovative finance where water is concerned, according to last year's State of Watershed Payments report, and is projected to be especially hard-hit by climate change. The US State Department has identified resulting water shortages here as a security threat with implications far beyond Latin America.

The program is being spearheaded by the Peruvian Environment Ministry and Forest Trends (the NGO that publishes Ecosystem Marketplace) with financing from the Berne-based Swiss Agency for Development and Cooperation (SDC).

It has three primary aims: first, to help cities across Peru build financing mechanisms that keep pressure off the watershed; second, to help MINAM build up a regulatory apparatus for keeping the mechanisms honest; and third, to develop a set of best practices that can be exported to other countries.

That’s where it gets interesting. These “payments for watershed services” mechanisms are popping up all over the world, and all are built on some iteration of a model that was pioneered by the Swiss back in the Middle Ages.

Until now, however, these lessons have been emerging in isolation, forcing project developers to go hunting for them. The Watershed Services Incubator aims to change that by implementing lessons learned elsewhere across Peru and then creating a formal template for other projects in other countries.